MONDAY, Feb. 5 (HealthDay News) -- President Bush's proposed $2.9 trillion federal budget, unveiled Monday, calls for health care spending cuts, including a major five-year reduction in Medicare expenditures to slow the program's annual growth rate from 6.5 percent to 5.6 percent.

The proposed total cuts of $78 billion for Medicare and Medicaid -- the federal health insurance programs for the elderly and lower-income Americans, respectively -- are part of Bush's plan to eliminate the federal deficit by 2012. However, Medicare spending would increase nearly $454 billion in 2008, an increase of $28 billion over this year, before the proposed reductions take effect.

The total 2008 budget for federal health care, administered by the U.S. Department of Health and Human Services, would be nearly $700 billion for the fiscal year that begins Oct. 1, an increase of more than $28 billion over 2007. Medicare makes up 55.4 percent of the HHS budget, while Medicaid accounts for 29 percent.

"The budget we are releasing today builds on our past successes and continues to invest in the future," HHS Secretary Mike Leavitt said in a prepared statement. "It sets out an aggressive, yet responsible, budget that funds our priorities and helps sustain our long-term commitment to seniors and low-income Americans. We are serving our citizens with compassion while maintaining sensible stewardship of their tax dollars."

Under the proposed budget, however, more Medicare beneficiaries would have to pay higher premiums for coverage of prescription drugs and doctor services, The New York Times reported Monday.

Currently, married couples who earn more than $160,000 and single people who earn more than $80,000 have to pay higher Medicare premiums for doctors' services. In his budget proposal, Bush wants a similar surcharge for the new prescription drug benefit, which took effect last year.

Bush is also proposing to "eliminate annual indexing of income thresholds," a move that would result in more Medicare beneficiaries eventually having to pay higher premiums, the Times reported.

It's expected the changes would bring in $10 billion more to the federal government over the next five years.

But now that Democrats control both houses of Congress, one health-care expert said it was unlikely there would be much, if any, change to the existing Medicare program.

"Increases in Medicare that would increase payments for poor people would be humanely and financially counterproductive," said Robert Hayes, president of the advocacy group Medicare Rights Center. "But we would expect Congress to reject that," he added.

Hayes said he thought any cuts in Medicare reimbursements would come at the expense of the insurance industry and pharmaceutical companies, as Congress mandates lower drug costs for Medicare recipients.

Planned Parenthood Federation of America (PPFA) criticized Bush's budget for proposing cuts to Medicaid. The budget proposal also doesn't increase funding for Title X, which provides access to contraception for low-income women and couples, the group said.

"For years, women and families have relied on Medicaid and Title X for family planning services. With the number of holes that this administration has poked in both programs, it's no wonder that American families are falling through the cracks. This budget will only worsen America's health care crisis," PPFA President Cecile Richards said in a prepared statement.

The proposed budget calls for minimal increased funding at the National Institutes of Health and the Centers for Disease Control and Prevention. For example, the proposed funding for the National Institute of Diabetes & Digestive & Kidney Diseases would be $1.858 billion, slightly less than a 1 percent increase from the current fiscal year, according to the American Diabetes Association.

Additionally, funding for the CDC's Division of Diabetes Translation, which runs state-based diabetes prevention and control programs, would remain flat at $62.8 million, the diabetes association said.

"It is very unfortunate that the Bush administration, as demonstrated by today's budget proposal, has failed to recognize that diabetes is the greatest public health crisis of the first quarter of the 21st century," Dr. Larry C. Deeb, president of medicine and science at the American Diabetes Association, said in a prepared statement. "The Bush administration and Congress have not increased the federal resources directed at diabetes in four years, while the disease has grown by nearly 30 percent in that same time period.

"Without the proper investment in diabetes treatment and prevention, which this budget proposal fails to provide, our health-care system will continue to spiral downward," Deeb said.

Criticism of the budget package also came from Dr. Raymond Gibbons, president of the American Heart Association, who said funding for cardiovascular disease-prevention programs administered by the CDC would remain flat for the second year in a row.

"The President's [fiscal year] 2008 budget raises serious concerns about the government's commitment to prevent cardiovascular diseases -- the nation's No. 1 killer. Funding for heart and stroke prevention programs is far short of what we need. This couldn't come at a worse time as higher rates of diabetes and obesity threaten to reverse four decades of steady progress in the fight against heart disease and stroke," Gibbons said in a prepared statement.

The budget proposal earmarks nearly $3 billion for health care for HIV/AIDS patients, $25 million to treat the illnesses of first responders at the 9/11 World Trade Center site in New York City, and $4.3 billion in bioterrorism spending, a $141 million increase over last year. This includes $135 million for the development of medical countermeasures for the Strategic National Stockpile, and $154 million to expand, train and coordinate medical emergency teams.

The proposed spending plan also calls for $1.2 billion to prepare for a pandemic flu, including increasing vaccine production capacity and stockpiling antiviral drugs, as well as the development of rapid diagnostic tests and enhanced rapid response capabilities.

As part of the budget proposal, the U.S. Food and Drug Administration has requested a 6.2 percent increase in its annual budget, to $1.64 billion.

"This increase will help advance our core mission of promoting and protecting public health," John Dyer, the FDA's deputy commissioner for operations and chief operating officer, said during a Monday teleconference. "The budget contains a net increase of $95.3 million for high-priority initiatives to enhance FDA's product safety system and continue our efforts to make available more affordable generic medication available to the American public."

Specifically, the FDA is seeking $10.6 million for food safety; $11.2 million for drug safety; $7.2 million for medial device safety, and $27 million in new user fees from manufacturers looking for FDA approval of drugs and devices.

More information

For more information on the health care budget, visit the U.S. Department of Health and Human Services.